ICMA welcomes today’s proposal from the European Commission for a revised mandatory buy-in framework under CSDR
16 March 2022 ICMA welcomes today’s proposal from the European Commission for a revised mandatory buy-in framework under CSDR, which takes into account a number of the concerns previously raised by ICMA and the wider industry, not least the potential negative effects of the regime, both in normal and stressed market conditions. For example, the inclusion of a pass-on mechanism and the provision for symmetrical payments of the buy-in differential are welcomed enhancements to the previous proposal. It is also encouraging that the application of the mandatory buy-in regime will be subject to an assessment by the Commission as to its appropriateness in the light of the evolution of settlement efficiency in the EU, allowing the opportunity for cash penalties, as well as other initiatives focused on improving settlement efficiency, some time to make an impact. However, ICMA would stress the importance of a robust approach to assessing not only settlement efficiency rates that importantly differ across different instruments and transaction types, but also the precise causes of settlement fails, with recognition of the extremely fragmented post-trade landscape that is a particular and longstanding characteristic of EU capital markets. ICMA would further caution that a regulatory, one-size-fits-all buy-in regime could be counterproductive for markets that already benefit from contractual buy-ins or other well-established remedies for settlement fails, for instance bond markets.